China accused of hacking into U.S. companies

A person walks past a 12-story building in Shanghai alleged in a report by Internet security firm Mandiant as the home of a Chinese military-led hacking group after the firm reportedly traced a host of cyberattacks to it.

WASHINGTON - As public evidence mounts that the Chinese military is responsible for stealing massive amounts of U.S. government data and corporate trade secrets, the Obama administration is poised to spell out specific trade actions it may take against Beijing or any other country guilty of cyber-espionage.

According to officials familiar with the plans, the White House is eyeing fines, penalties and other trade restrictions as initial, more aggressive steps the U.S. would take in response to what top officials say has been an unrelenting campaign of cyberstealing linked to the Chinese government. The new strategy is to be released Wednesday, said the officials, who spoke on condition of anonymity because they were not authorized to speak publicly about the threatened action.

The White House plans come after a Virginia-based cybersecurity firm released a torrent of details Monday that tied a secret Chinese military unit in Shanghai to years of cyberattacks against U.S. companies. After analyzing breaches that compromised more than 140 companies, Mandiant has concluded they can be linked to People's Liberation Army's Unit 61398.

Pressure to act

Military experts believe the unit is part of the PLA's cyber-command, which is under the direct authority of the General Staff Department, China's version of the Joint Chiefs of Staff. As such, its activities would be likely to be authorized at the highest levels of China's military.

The release of Mandiant's report, complete with details on three of the alleged hackers and photographs of one of the military unit's buildings in Shanghai, makes public what U.S. authorities have said less publicly for years. But it also increases the pressure on the U.S. to take more forceful action against the Chinese for what experts say has been years of systematic espionage.

"If the Chinese government flew planes into our airspace, our planes would escort them away. If it happened two, three or four times, the president would be on the phone and there would be threats of retaliation," said former FBI executive assistant director Shawn Henry.

Henry, now president of the security firm CrowdStrike, said that rather than tell companies to increase their cybersecurity, the government needs to focus more on how to deter the hackers and the nations that are backing them.

James Lewis, a cybersecurity expert at the Center for Strategic and International Studies, said that in the past year, the White House has been taking a serious look at responding to China, adding that "this will be the year they will put more pressure on, even while realizing it will be hard for the Chinese to change. There's not an on-off switch."

China blames hackers

The Chinese government, meanwhile, has denied involvement in the cyberattacks tracked by Mandiant. Instead, the Foreign Ministry said that China, too, is a victim of hacking, some of it traced to the U.S. Foreign Ministry spokesman Hong Lei cited a report by an agency under the Ministry of Information Technology and Industry that said in 2012 alone that foreign hackers used viruses and other malicious software to seize control of 1,400 computers in China and 38,000 websites.

"Among the above attacks, those from the U.S. numbered the most," Hong said at a daily media briefing, lodging the most specific allegations the Chinese government has made about foreign hacking.

Cybersecurity experts say U.S. authorities do not conduct similar attacks or steal data from Chinese companies but acknowledge that intelligence agencies routinely spy on other countries.

Mandiant said there are only two viable conclusions about the involvement of the Chinese military in the cyberattacks: Either Unit 61398 is responsible for the persistent attacks, or they are being done by a secret organization of Chinese speakers with direct access to the Shanghai telecommunications infrastructure who are engaged in a multi-year espionage campaign being run right outside the military unit's gates.